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Sunday, February 06, 2011

Casual, contract & the young

My last post in this series on some of the problems that PM Julia Gillard must overcome if she is to reduce the two million or so Australians who are un or under employed, Casual, contract & the older worker, focused on contract work and especially the older worker. This post looks at the young.

My daughters are 23 and 21. Both, especially eldest, have worked since they were quite young. There is nothing really unusual about that, yet they are symptoms of a major social change.

When I was growing up, those in education generally did not work. Now they do. Employers have geared to this. Entire segments of the economy - retail, hospitality, service stations, convenience stores, fast food - now draw their primary workforce from students. Few of the students expect to go on in the industry; it's a passing phase in their life.

The practical effect of this is that competition for lower entry level jobs requiring limited skills has greatly increased. Who loses from this? Those groups who used to use these jobs as a pathway into the full time workforce.

At the same time, availability of unskilled or semi-skilled manual work, the second traditional pathway into full time work, has also declined.

Pay rates for casual work vary greatly depending on whether its over or under the table and on the individual employer. From experience with my daughters and their friends, rates offered seem to vary from $10 to around $17 per hour. Some businesses still pay overtime and weekend or public holiday rates, others do not. There appear to be considerable variations between sectors.

There is a whole interface here with the new award system that I do not properly understand. For that reason, I am putting it aside.

The amount of money that you can earn as a casual depends not just on rates, but one the availability of hours. On $17 per hour and at a 40 hour week, you gross $680 per week. This equates to $35,360 per annum. However, as a casual, you do not get holidays or sick-pay; the practical effect is that the annual gross drops to something like $31,000 per annum adjusting for holidays and some other time off.

I have deliberately chosen $17 per hour because this rate appears to be towards the upper end of the pay spectrum.

Availability of work of the type I am talking about is affected by location and recruitment methods. Jobs and people do not necessarily coincide, so travel times and costs have to be factored in. Further, while some employees like Coles or Woolworths have highly structured recruitment systems, in most cases recruitment is more casual.

The Coles or Woolies on-line systems themselves are complicated, especially for those who do not have a computer at home. Even with Coles and Woolies, more so with smaller employees including the fast food franchises, networks are important.

Freda works for X. She knows that a job is coming up, so tells old school friend Julie. Julie gets the job on Freda's recommendation. This makes perfect sense for the employer because it minimises recruitment costs. It is especially important where gaps have to be filled quickly.

This networking component is important in other parts of the job market, something that I want to return to later.

If you don't have a network, you face a round of CV drops until you strike it lucky.

Competition for jobs varies greatly depending upon location. In Sydney's Eastern Suburbs, for example, competition from students in the areas around the University of New South Wales is quite intense.

There is also an issue with credentials. To get a job in hospitality in NSW you need an RSA (Responsible Service of Alcohol) certificate. If you want a job in a coffee shop, it helps to have a Barista qualification. There is nothing necessarily wrong with this. But it is easier for middle class kids whose parents can provide the money required.

This actually cascades up the age change. Want to look after kids? Well, you have to get the necessary tickets.

We have entered the area that actually dominates a fair bit of discussion on welfare benefits and work. One leg aims to remove the disincentives to getting work A second aims to force welfare recipients to get work.

I now want to introduce a new concept, Epidemiology. Wikipedia defines Epidemiology in this way:

Epidemiology is the study of patterns of health and illness and associated factors at the population level. It is the cornerstone method of public health research, and helps inform evidence-based medicine for identifying risk factors for disease and determining optimal treatment approaches to clinical practice and for preventative medicine.

The approach we adopt on defining public policy in areas such as reducing un or under employment is, in fact, epidemiological.

We deal with broad population statistics, we look at overall trends, and we then introduce approaches that will reduce the numbers we want to reduce. In health, we have anti-smoking campaigns, in social policy we change welfare rules. One aims to reduce the number of smokers, the other to reduce the number of welfare recipients.

Anybody who deals with epidemiological studies knows that the relationships are complicated. They also know that population wide studies do not necessarily have relevance for individual patients and may have unforeseen side effects.

Reducing salt intake offered certain measurable benefits, but also increased goitre. Anti-sunbathing campaigns reduced cancer, but also increased vitamin deficiencies. Compulsory wearing of helmets by cyclists reduced deaths from head injuries, but also reduced health by reducing the number of cyclists and thus exercise. All these things are well documented.

My point is that when we come to look at generalised arguments, we also need to look at their limitations and the way they play out in specific contexts. If you just look at my simple analysis in this post, you can see some of the individual complexities involved.

Postscript

By coincidence, Justin Norrie had an interesting piece today in the SMH: Raw deal for sushi workers. If you read it, you will get a feel for some of the complexities on the pay side.

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